Review team finds 'financial emergency' exists, again, in Hamtramck

May 23, 2013

An independent review team says the city of Hamtramck is indeed dealing with a “financial emergency.” The small city takes up about two square miles within the city of Detroit.

Hamtramck just emerged from the control of an emergency financial manager six years ago. Now its deficit is $3.3 million. That’s 20 percent of the money the city expects to bring in this fiscal year.

Michigan Treasury Department Spokesman Terry Stanton says the new emergency manager law gives cities new tools, like an advisory board to help transition out of a financial emergency and a two-year budget.

“The expectation is that those provisions in the act will help ensure that a local unit that has a financial emergency addressed at some point will be able to stay on the straight and narrow going forward and not have a relapse,” Stanton said.

If Governor Rick Snyder agrees with the review team, city leaders will have options to choose from, including bringing in an emergency manager. Find out more on how the process works here.

The team highlighted these conditions that helped it reach its conclusion that a financial emergency exists.

• City officials had delayed making required monthly pension contributions to the Municipal Employees Retirement System of Michigan in order to manage cash flow. The amount of unremitted pension contributions was approximately $1.6 million for the months of September, November, and December 2012, and January, February, and March 2013.

• The projected General Fund deficit of $3.3 million as of June 30, 2013, exceeds 5 percent of the $16,070,514 in General Fund revenues which the City has budgeted for the 2013 fiscal year as reported in the fiscal year 2013 Executive Budget.

• A structural operating deficit has existed in the City’s General Fund during the last three fiscal years ($1.2 million in FY 2010, $341,216 in FY 2011, and $3.3 million in FY 2012).